Turn Out The Lights On New York's Energy Tax

ALBANY, 02/05/13 -- State Senator James L. Seward (R/C/I – Oneonta) today announced opposition to the governor’s proposed extension of a utility tax surcharge which would cost businesses and homeowners almost $3 billion over the next five-years.

“I voted against this hidden fee when it was first adopted several years ago, called for its repeal, and don’t want to see it imposed on rate payers a day longer than planned,” said Senator Seward. “New York’s utility rates are among the highest in the nation, and if we are truly going to be open for business, we need to take meaningful steps to lower those costs.”

The 18-a surcharge, which has increased utility bills for every ratepayer in the state, is scheduled to expire on March 31, 2014. However, the governor’s proposed extension would cost energy ratepayers $509 million for this year and the following four years, as well as $255 million in state fiscal year 2018-19. The total impact of the extension would be $2.8 billion, with most of the burden falling on small and large businesses, particularly manufacturers that use large amounts of energy.

“Reviving our once vibrant upstate manufacturing sector is a demanding task. Reducing the cost of doing business is one of the key steps needed to achieve success. Farmers also struggle greatly with this added cost. Pursuing new markets for New York grown products and promoting homegrown wares, as the governor has proposed, will be fruitless if our farmers can’t afford to stay in business,” Seward added.

Julie Suarez, New York Farm Bureau Public Policy Director, said: “At a time when the prices of feed and fuel are sky high for our members, it is imperative for the state to allow the Article 18-a assessment step down to go forward to help contain rising production costs. Profit margins are thin at best for many of New York’s family farms, and keeping the 2% “tax” in place is not the business friendly approach that will help New York’s farms be more competitive.

Heather Briccetti, president and CEO of The Business Council of New York State, Inc. said: “New York's electric rates are heavily burdened by hidden taxes. A report by Public Policy Institute finds more than one-quarter of electric bills in New York are from state and local taxes. Extending the so-called ‘Section 18-a’ fee will cost all energy consumers in the state at total of $2.8 billion."

Brian Sampson, Executive Director of Unshackle Upstate, said: “New York businesses and homeowners continue to pay some of the nation’s highest energy costs, and state-imposed taxes such as the 18-a tax are a big part of those high energy costs. We have called for the repeal of this regressive, onerous and anti-economic growth energy tax since it was first enacted, and we strongly oppose any extension beyond its planned 2014 expiration.”

Karyn Burns, Vice President for Communications & Government Relations of MACNY, The Manufacturers Association of Central New York, stated, "As we began our path together in achieving fiscal stability here in New York State three years ago, Governor Cuomo remained committed to not raising taxes on businesses and residents, and in turn the state's manufacturing and business community worked to keep business going, their doors open, products manufactured and job retained and added. Like anything worth doing, it was tough, but it was done. An extension of the 18-a tax would be a huge step back for these hard working businesses. Those very same companies had paid the temporary tax with the belief it would sunset, and planned their business and expansion plans according to this promise from Albany. To continue this tax will most certainly compromise the business community's ability to do everything they need to on this continued path towards economic recovery. I urge Governor Cuomo to remove this proposal from his budget proposal, and thank the Senate Republicans on their commitment to do so."

Beth Finkel, State Director for AARP New York, said: “AARP commends the senate for their leadership in working to make utility bills more affordable for all New Yorkers. This is a crucial kitchen table issue, as state residents pay some of the highest utility costs in the nation, a status that takes an unduly harsh toll on the elderly and those on fixed incomes. This move, coupled with AARP's push to help consumers have a stronger voice during rate hikes, is surely needed to help New Yorkers better afford the basic necessity of their utilities."

According to figures from National Grid, the impact of the energy tax extension on a typical large business is estimated at $30,000 per year. The added cost on a typical small business would be about $540 per year and average household utility bills would increase by $55 per year.

“Every single ratepayer feels the pinch due to this utility surcharge and it must end. New York State needs to follow through on promises that have already been made and allow this unfair tax to expire on schedule,” Seward concluded.